Any help Appreciated Nominal and effective interest rates A departmental store h

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Any help Appreciated

Nominal and effective interest rates A departmental store has offered you a credit card that charges interest at 1.3% per month, compounded monthly. What is the nominal interest rate for this credit card? What is the affective annual interest rate? If your credit card calculates interest based on 18% APR, compounded monthly What are your monthly interest rate and annual effective interest rate? If you're currently outstanding balances $3000 and you skip payment for two months, what would be the total balance two months from now? A local bank advertises the following information: interest 6.89% - effective annual yield 7.128%. No mention was made of the interest period in the advertisement. Can you figure out the compounding scheme used by the bank? A financial institution is willing to lend you $300. However, $315 is repaid at the end of one week: What is the nominal interest rate?

Explanation / Answer

1.

Nominal interest rate r = 1.3%*12 = 15.6%

Effective annual interest rate(i) = (1+0.013)12 -1

                                                 = 1.16765-1

                                                 = 0.16765 = 16.76%

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